The inner workings of UBS's London trading operation in the run-up to its $2.3bn unauthorised trading loss last year came back under fresh scrutiny, after UK and Swiss regulators levied a £29.7m fine on the firm.

The UK Financial Services Authority and the Swiss Financial Market Supervisory Authority said that "significant failings" in UBS's supervision, systems and controls had allowed Kweku Adoboli to cause the losses discovered in September last year.

Adoboli was convicted of two counts of fraud and sentenced to seven years imprisonment last week following a 10 week trial.

UBS said that it was "pleased that this chapter has been concluded" and said that the regulators had acknowledged the steps it had taken since this incident.

The bank said it had fixed its failures through "extensive remedial action" and had taken disciplinary action against staff involved.

Here we examine the bank's failures as detailed in the FSA and Finma reports, and as heard through the course of Adoboli's criminal trial at Southwark Crown Court in London.

• Supervision of the desk

The FSA said that Adoboli’s supervision had been “inadequate” and criticised a restructure of the firm’s business.

The regulator said UBS had failed to complete the handing of control of the ETF trading desk from its cash equities division to its global synthetic equity division by September 2011.

As part of the switch, the ETF desk’s London-based supervisor Ron Greenidge was supposed to hand supervision to John DiBacco, a New York-based global head of Delta One trading. However, the FSA said that responsibilities were inadequately transferred, and Greenidge continued to receive supervisory reports despite having no ongoing responsibilities over the desk.

Finma also said that responsibility for monitoring Adoboli’s trading activities had been “unclear” and that a switch in control of the ETF desk as part of the shakeup had been "badly managed".

Both DiBacco and Greenidge have since left UBS.

• Missed warning signs: Increase in revenue

The revenue of the desk increased significantly between 2010 and the first and second quarters of 2011, which the FSA said should have acted as a warning sign.

In 2010, the net revenue of the desk had been $9m for the year. In the first quarter of 2011 it had risen to $21m and to $52m by the end of the second quarter.

The increase was several times greater than an increase in the desk’s risk limits, and management did not make any inquiries into how this revenue was being generated, the FSA said.

Adoboli said in his defence in the trial that management would have known he was trading illicitly given the outsized nature of his profits.

• Risk limits

The FSA said that risk limits were breached four times between June 23 and July 15, 2011. Finma said that in one of these cases, Adoboli revealed to his manager in New York that he had made a profit of $6m by taking a position of more than $200m, far in excess of his approved risk limit. The line manager first congratulated Adoboli on the profit and only later reminded him that he needed permission to exceed his limit.

The court heard how Adoboli’s manager, John DiBacco wrote of the breach: "When over $100m and certainly $200m, I need to know before, not after. If the P&L had gone the other way, I don't want crap coming down on you alone. If you told Riccardo, that is fine."

The FSA also said that UBS increased its risk limits after the desk was transferred to the global synthetic equity division in April 2011, from $50m intraday and $25m overnight to $100m intraday and $50m overnight.

• Compliance systems

The FSA said that Adoboli’s activities had “revealed serious weaknesses in the firm’s procedures, management systems and internal controls”.

The regulator said the bank had been shown to have “deficiencies” in its so-called Supervisory Control Portal – a compliance system which compiled various risk control and compliance reports into one place for supervisors to sign off on traders’ activities.

Reports for cancelled, amended and late trades – which could have revealed how Adoboli traded off-book – were sent to Ron Greenidge after he had relinquished control of the desk to John DiBacco.

From August 26, the reports were sent to traders on the desk to sign off on themselves, according to the FSA. At this time, Adoboli’s colleague John Hughes held the responsibility to sign off on the reports, however when he went on holiday in late August, Adoboli was able to sign off on the reports himself.

• Trading controls

Several control systems at the bank were found to have allowed Adoboli to conduct his activities, the regulators said.

Colin Bell, global head of operational risk control at UBS, defended the bank’s systems as a witness for the prosecution during the trial, although also admitted that there had been flaws.

He said that a system to check trades with settlement dates that had been extended had failed to work twice since it was introduced in 2008. Adoboli had used fictitious trades with extended settlement dates to conceal his real trading positions.

• The back office

The FSA said that UBS’s operations division had acted as a facilitation division rather than having a specific risk control mandate, which contributed to the bank's failure to catch Adoboli.

The regulator said: “There was a culture of helping the traders to clear breaks on the basis of the explanations they provided as opposed to challenging the traders and questioning whether their explanations were correct.”

Adoboli claimed in the trial that back office staff at UBS had known about his activities; including Henry Chu, a former trade support analyst at UBS and Johannes Zuidmeer, a former back-office contractor at UBS. No back office staff at UBS have been accused of any criminal wrongdoing.

Zuidmeer, in witness testimony for the prosecution, said he had allowed Adoboli to hold a $1bn loss off his desk’s accounts overnight without it being “investigated or challenged”. The loss was temporarily suspended after Zuidmeer accepted Adoboli’s explanation that he needed more time to reconcile his records. He denied that he had approved of the true nature of Adoboli's trading.

Chu said that he “never thought for a second it was a fake transaction”.

• Trade capture and processing systems

The FSA found that UBS’s trade capture and processing systems, which log a trader’s activity in the bank’s accounting systems, had “significant deficiencies”, which Adoboli exploited in order to conceal his unauthorised trading.

The system allowed trades to be booked to an internal counterparty without sufficient details, and there were no effective methods in place to detect trades at material off-market prices and there was a lack of integration between systems.

UBS learned of breaks in its trading reconciliation systems – alerts when trade details did not match on the bank’s systems – in August 2011, the FSA said.

Adoboli’s explanations for the breaks had been accepted by UBS, right up until he delivered a “bombshell” email to a back office accountant on September 14 outlining his fictitious trading activities.

• Culture of pushing the boundaries

Finma said that UBS had sent out misleading signals by awarding pay increases and bonuses to Adoboli, who they said had "clearly and repeatedly breached compliance rules".

Adoboli said in his defence that the bank had encouraged him to take more risk and had put pressure on his trading strategies.